What is Going on With Toronto Real Estate Right Now?

What is Going on With Toronto Real Estate Right Now?

Despite all that is going on in the world right now, it’s interesting to note that real estate continues to be a hot topic here in Toronto. And while we did see some temporary changes in the market – most of which were a result of the arrival of the pandemic in Canada – they were temporary, as expected.

I am a big believer that for us to understand where we are now, we need to look back at where we were and at the fundamentals of the market itself.

Then vs. Now

Let’s go back to February 2020, which feels like a year ago but is really only 4 months ago. The market was hot. Properties seemed to be selling as soon as they hit the market or were on the market for a few days pending “offer night” where a strategically priced property would easily receive 10 or more offers.

Now, why is that? Ultimately, it is for the same reason I am always talking about: supply and demand. I won’t go into a lesson on economics other than to say that while supply continues to stay low, and demand continues to grow higher, prices will continue to go up. Just look at how much disinfectant products cost today versus what you would have paid only a few short months ago.

People will talk about interest rates, population changes, demographics, the job market, etc. These are all factors impacting demand, but it all still boils down to how many people want to buy and how many properties are available for purchase.

Why is Supply So Low?

Before COVID-19 upending our lives, we were dealing with a low supply of homes for sale. There are a number of reasons for this but here are a few that I have personally encountered:

• Renovations are more popular than ever – rather than buy a new home, people are renovating their existing home to make it fit more of their criteria.
• Homes are being passed down to other family members either through willing them or purchasing them privately.
• People cannot afford the jump from their starter home to the next upgrade and are holding off on selling until they save more money for the purchase. These people won’t sell until they can find and afford what they are looking for.
• People cannot find what they are looking for in this market and won’t sell until they buy. Without inventory (an increase in supply) it will be hard for them to buy. That, in turn, means they are not contributing to the inventory because they can’t list their home now.

How Did COVID-19 Affect the Market?

It depends on who you ask and where they are getting their information from. I will say that I have been speaking with buyers who are certain that prices will go down and potential sellers waiting for prices to go up. Unfortunately, information that is being circulated is not always accurate. And some of the accurate information is being “spun” to tell a story that isn’t necessarily educating people with the truth.

With that in mind, I would like to be clear about the reality of the market today.

As it stands today, listings are up, prices are up, and sales are up – generally speaking. There are always going to be certain segments or neighbourhoods or even pockets of neighbourhoods that don’t reflect the overall situation. The question should be “what is happening in this specific area for this particular type of home” rather than what is happening in Toronto to condo prices. 

If condo prices have gone down in Toronto because there is a fluctuation in supply, does that mean that condo prices in Thornhill have gone down as well? Not necessarily.

We have been told that prices will go down by 18% over the next year. People believe that will happen here in Toronto, except that number was for all of Canada. Toronto is a stable market that was essentially frozen for a few weeks while people adjusted, isolated, and reassessed their situations. Some property values indeed went down slightly due to COVID, some for other reasons (rule changes to Airbnb for example), which impacted supply and therefore prices. We still saw bidding wars in some areas and I personally sold two properties in multiples during the height of the pandemic while following all the rules. Today, bidding wars are just as common as they were in February.

The overall message is that there is still a lot of pent up demand. Yes, some buyers may put their plans aside for now because they lost their job or are re-evaluating their needs or are even waiting for prices to drop as the media has suggested would happen. There are also those who have been waiting to get in the market and have made that a priority now that their lives have changed in other ways.

My Predictions

I predict that prices will continue to rise overall. Supply will continue to stay low for the most part and demand will continue to grow.

If you are curious about home values in your current neighbourhood or about your future neighbourhood, please call me. It is my pleasure to educate with accurate information and to advise you in your real estate decisions based on both market factors and your own personal ones.

Stay healthy, stay safe and stay informed.